Riding the Type 3 Mega Market Melt Up Train
Monday, November 11, 2019 14:17
% of readers think this story is Fact. Add your two cents.
“Riding the Type 3 Mega Market Melt Up Train”
by MN Gordon
“The decade long bull market run, aside from making everyone ridiculously rich, has opened up a new array of competencies. The proliferation of ETFs, for instance, has precipitated a heyday for the ETF Analyst. So, too, blind faith in data has prompted the rise of Psychic Quants… who see the future by modeling the past. For the big financial outfits, optimizing systematic – preprogrammed – delta hedges is an essential aptitude of the 21st century. Our guess is that many of today’s high-fliers will crash and burn during the next bear market. But what do we know?
As far as we can tell, the stock market, circa November 2019, is an absolute fantasy. The Dow Jones Industrial Average (DJIA), S&P 500, and Nasdaq have little connection to the underlying economy. Rain or shine, they go up.
Market watchers, eager to explain the fantasy, employ creative nomenclature as they attempt to classify the state of the stock market with discerning acumen. Is it a bubble? Is it a melt up? If it is a melt up, what type and gradation is it?
For example, Brian Sozzi, with Yahoo Finance, says the stock market is not in a bubble; we are merely experiencing a mini market melt up ahead of the holidays. Savita Subramanian, chief equity strategist with Bank of America, has a slightly different take. She thinks we are facing a beta-driven melt up to close out the year.
Click image for larger size.
The mother of all bubbles, monthly. [PT]
Do you know the difference between a mini market melt up and a beta-driven melt up? Neither do we… Thus, for fun and for free, we will attempt to deduce and classify the state of the stock market – both type and gradation – on your behalf. We want to know precisely where things stand.
New Records: On Thursday the DJIA and S&P 500 both closed at all-time highs. President Trump, an ardent market hobbyist, was quick to celebrate the new records, tweeting: “Stock Market up big today. A New Record. Enjoy!” Many good Americans celebrated too. Take Barry McCockiner. He was so grateful to Trump for this milestone he went to Apple Bee’s with his wife’s boyfriend and celebrated by pounding down a few beers.
However, those who bothered to ponder the delusion of all time stock market highs without an equally booming economy were less sanguine. Obviously, something has gone seriously awry.
Currently, the Buffett Indicator, which is the ratio of the total market capitalization over gross domestic product, is over 145 percent. A fairly valued market is a ratio somewhere between 75 and 90 percent. Anything above 115 percent is considered significantly over valued.
Click image for larger size.
The market cap-to-GDP ratio, a.k.a. the “Buffett indicator” has risen into the blue yonder.
This may explain why Berkshire Hathaway is sitting on more than $100 billion in cash. [PT]
The Buffett Indicator has only been higher two times: in September of last year, when it hit 146 just prior to the S&P 500’s 20 percent purge; and in March 2000, when it hit 148 just before the S&P 500 collapsed 49 percent. For perspective, the Buffett Indicator only registered 110 in September 2007, in advance of the S&P 500 crashing 56 percent
For now, though, stocks are going up. At the same time, the economy is slowing. The Chicago Purchasing Management Index (PMI) fell to 43.2 – nearly a four year low – in October. Any reading below 50 indicates deteriorating conditions. Gross Domestic Product (GDP) has also stalled out. The Atlanta Fed has lowered its Q4 growth estimate to 1 percent. Year-over-year GDP growth is just 2 percent.
What is going on?
Riding the Type 3 Mega Market Melt Up Train: If you follow the money back from the booming stock market to its genesis you end up at the steps of central banks, including the Federal Reserve. For the third time in 20 years, the Fed has put the investment wealth – including 401ks and IRAs – of millions of Americans at extreme risk. Naturally, this always happens at the worst possible time.
Monetary policy – via insurance rate cuts – is being executed to stimulate demand in the economy. By brainlessly pursuing the illusive nirvana of 3 percent GDP growth and a 2 percent inflation target, the Fed is provoking a market melt up. And American investors are, once again, being setup to get their kneecaps broken off.
To the disgrace of central bankers the world over, further monetary stimulus will not stimulate the economy. That is the experience of the last two decades. Despite massive monetary insanity the economy has slacked and slumped, while financial markets have melted up and then melted down.
Click image for larger size.
Assets held by the Fed vs. the federal funds rate –
the planners are pumping all-out again. [PT]
So while additional monetary stimulus won’t stimulate the economy, it will stimulate additional stock price distortions and asset price bubbles. Given the massive amounts of monetary intervention being undertaken we fear you ain’t seen nothing yet… In fact, we may be in for the train ride of a life time: DOW 30,000? DOW 40,000? DOW 100,000? Why not?
With Fed Chair Powell as conductor, and the third wild ride in the last 20 years underway, this melt up will be mega. Hence, we are classifying the melt up as: Type 3 Mega.
Quite frankly, the ride to DOW 30,000 – or higher – is not something to cheer and celebrate. For it is not a reflection of a booming, healthy economy. Rather, it is an expression of the pure madness and insanity of the world’s central bankers. If you have your wits about you, we suggest making a quick exit at the next station.”
○
Source: http://coyoteprime-runningcauseicantfly.blogspot.com/2019/11/riding-type-3-mega-market-melt-up-train.html
Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.
"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video).
MOST RECENT
HELP KEEP NEWS FREE
DONATE
HERE
| Online: | |
| Visits: | 1,603,855,333 |
| Stories: | 8,151,555 |
Wanted: Citizen Reporters,
Whistler Blowers, Insiders
Whistler Blowers, Insiders
"Not by might, nor by power, but by my spirit, saith the Lord of hosts." Zechariah 4:6
Today's Top Stories
Featured
Top Global
Top Alternative